Non-Applicability of Chapter III to the Issue of Foreign Currency Convertible Bonds (FCCBs) and Foreign Currency Bonds

MCA has issued Circular 43/2014 dated 13 November 2014 with regard to the references received from stakeholders seeking clarity on applicability of provisions of Chapter III of the Companies Act, 2013 (Act) to the issue of Foreign Currency Convertible Bonds (FCCBs) and Foreign Currency Bonds (FCBs) by Indian companies exclusively to persons resident outside India in accordance with applicable sectoral regulatory provisions.

It has been clarified that  the issue of FCCBs and FCBs by companies is regulated by the Ministry of Finance’s regulations contained in Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipts Mechanism) Scheme, 1993 (Scheme) and Reserve Bank of India through its various directions/regulations therefore, unless otherwise provided in the said Scheme or the directions/regulations issued by Reserve Bank of India, to an issue of a FCCB or FCB made exclusively to persons resident outside India in accordance with the above mentioned regulations.